The World Health Organization estimates that 350 million people are chronically infected with HBV and approximately twenty-five percent of these individuals will succumb to chronic active hepatitis, cirrhosis, or hepatocellular carcinoma. Although a tremendous amount is known about HBV, our understanding of HBV pathogenesis is by no means complete. Two important areas that require further investigation are the replication intermediate HBV nuclear covalently closed circular (CCC) DNA and drug resistance mutants. CCC DNA is a highly stable molecular that serves as the reservoir for chronicity of infection and rapid rebound of HBV replication and acute hepatitis after release from drug therapy. Use of the nucleoside analogue lamivudine for therapy in patients with chronic HBV has led to the man-made problem of infection with drug resistance mutants. During the last funding period, our laboratory developed a novel transient mechanism for studying HBV gene expression and replication using recombinant wild type and mutant HBV baculoviruses to deliver the HBV genome to human hepatic HepG2 cells. The HBV baculovirus/HepG2 system is the only in vitro system in which CCC DNA is produced at sufficiently high levels that it can be detected by Southern blot analysis. This system recapitulates the replication process in patients in that transcription is driven from CCC DNA, nucleocapsids recycle to the nucleus to deliver CCC DNA to the nucleus and rebound of HBV replication after release from antiviral therapy as a result of stable CCC DNA can be demonstrated. We have also demonstrated that the HBV baculovirus system can be used to study replication of HBV mutants, which has resulted in provocative findings regarding replication of at least one HBV drug resistance mutant. We propose to continue to use the HBV baculovirus to pursue unanswered questions regarding chronic HBV infection that follow directly from ongoing studies in the laboratory or represent extensions of these studies. The Specific Aims are: (1) To investigate whether failure of the HBV drug resistance mutant rtM2041, which contains a mutation in the polymerase, to yield self-perpetuating HBV replication can be corrected by complementation with wild type HBV polymerase; (2) To evaluate transcription from CCC DNA of the 3.5 Kb HBV transcripts; (3) To determine the relationship of phosphorylation status and subcellular localization of core to HBV replication. In addition, to determine the effect of cell cycle on phosphorylation status and subcellular localization of core and recycling of CCC DNA to the nucleus, and (4) To use the HBV recombinant baculovirus/HepG2 system to develop a mouse model for HBV replication in which HBV CCC DNA is expressed.